Category Archives: Risk Management

While not a complicated or strategic topic that I would normally highlight, this one bit of news is from my home airport and personally meaningful.

Basically the report shows that 1,600 badges were lost or stolen in a 2 year period. This seems like a big number (2.6%), but this is a control that should (and not highlighted in broadcast) secondary supportive controls, such as:

Analytics on badge entries against the work shifts of the person assigned

Access to areas not zoned for that worker

Termination of employees who don’t report in 12 hours on lost/missing badge

There are safeguards highlighted in broadcast that are good, but easily modified to the point of not being any value, and include:

Pin (can be easily observed due to tones and no covering)

Picture (every movie ever shows how easy this is done)

An old badge could be re-programmed and be a duplicate of another higher ranking / alternate security zone

Bottom line is organizations, especially those tasked with safety of human life, must have the primary and secondary controls in place. Hopefully the remarks of a minor risk are based on their security assessments with the considerations above (and more perhaps).

Article:
Hundreds of ID badges that let airport workers roam the nation’s busiest hub have been stolen or lost in the last two years, an NBC News investigation has found.

While experts say the missing tags are a source of concern because they could fall into the wrong hands, officials at Hartsfield-Jackson Atlanta International Airport insist they don’t pose “a significant security threat.”

ENISA released a study with a methodology identifying critical infrastructure in communication networks. While this is important and valuable as a topic, I dove into this study for a particularly selfish reason … I am SEEKING a methodology that we could leverage for identifying critical connected infrastructure (cloud providers, SAAS, shared services internally for large corporations, etc..) for the larger public/private sector. Here are my highlights – I would value any additional analysis, always:

Challenge to the organization: “..which are exactly those assets that can be identified as Critical Information Infrastructure and how we can make sure they are secure and resilient?”

Key success factors:

Detailed list of critical services

Criticality criteria for internal and external interdependencies

Effective collaboration between providers (internal and external)

Interdependency angles:

Interdependencies within a category of service

Interdependencies between categories of services

Interdependencies among data assets

Establish baseline security guidelines (due care):

Balanced to business risks & needs

Established at procurement cycle

Regularly verified (at least w/in 3 yr cycle)

Tagging/Grouping of critical categories of service

Allows for clean tracking & regular security verifications

Enables troubleshooting

Threat determination and incident response

Methodology next steps:

Partner with business and product teams to identify economic entity / market value

Identify the dependencies listed about and mark criticality based on entity / market value

Develop standards needed by providers

Investigate how monitoring to standards can be managed and achieved (in some cases contracts can support you, others will be a monopoly and you’ll need to augment their processes to protect you)

Refresh and adjust annually to reflect modifications of business values

I hope this breakout is helpful. The ENISA document has a heavy focused on promoting government / operator ownership, but businesses cannot rely or wait for such action and should move accordingly. The above is heavily modified and original thinking based on my experience with structuring similar business programs. A bit about ENISA’s original intent of the study:

“Major developments with Big Data, Cloud, Mobile, and Social media” – the context and reality here is cavernous.. “

My analysis and near-random break down of this tweet are as follows with quotes pulled from the panel.

First off – be aware that these key phrases / buzz words mean different things to different departments and from each level (strategic executives through tactical teams). Big Data analytics may not be a backend operational pursuit, but a revenue generating front end activity (such as executed by WalMart). These different instantiations are likely happening at different levels with varied visibility across the organization.

“Owning” the IT infrastructure is not a control to prevent the different groups from launching to these other ‘Major developments’.

The cost effectiveness of the platforms designed to serve businesses (i.e., Heroku, Puppet Labs, AWS, etc…) is what is defining the new cost structure. CIO and CISO must

>The cloud is not cheaper if it does have any controls. This creates a risk of the data being lost due to “no controls” – highlighted by Melanie from the panel. <– I don’t believe this statement is generally true and generally FUD.

Specifically – There is a service level expectation by cloud service providers to compensate for the lack of audit ability those “controls”. There are motions to provide a level of assurance to these cloud providers beyond the ancient method established through ‘right to audit‘.

A method of approaching these challenging trends, specifically Big Data, below as highlighted by one of the CISO (apologies missed his name) w/ my additions:

Data flow mapping is a key to providing efficient and positive ‘build it’ product development. It helps understand what matters (to support and have it operational), but also see if anything is breaking as a result.

Two observations impacting the CISO and information technology organization include:

The Board is starting to become aware and seeking to see how information security is woven within ERM

Budgets are not getting bigger, and likely shrinking due to expectations of productivity gains / efficiency / cloud / etc…

Rationalization on direction, controls, security responses, must be be fast for making decisions and executing…

Your ability to get things done has little do with YOU doing things, but getting others to do things. Enabling, partnering, and teaming is what makes the business move. CIO and CISO must create positive build-it inertia.

Support and partner with the “middle management” the API of the business if you will.

We to often focus on “getting to the board” and deploying / securing the “end points” .. Those end points are the USERS and between them and the Board are your API to achieving your personal objectives.

Vendor Management vs procurement of yester-year

Acquiring the technology and services must be done through a renewed and redeveloped vendor management program. The current procurement team’s competencies are inadequate and lacking the toolsets to ensure these providers are meeting the existing threats. To be a risk adaptive organization you must tackle these vendors with renewed. Buying the cheapest parts and service today does not mean what it meant 10 years ago. Today the copied Cisco router alternative that was reverse engineered lacks an impressive amount of problems immediately after acquisition. Buying is easy – it is the operational continuance that is difficult. This is highlighted by the 10,000+ vulnerabilities that exist with networked devices that will never be updated within corporations that must have their risks mitigated, at a very high and constant cost.

Big Data introduces an opportunity that organizations see when merging silo product operations together forming a service layer or an enhanced hybrid product. Big Data also requires exceptional enterprise intelligence from the perspective of establishing the scaffolding for enterprise grwoth. That scaffolding requires advanced information technology system and business process matrix visibility. My thesis … let me elaborate below on a single thread here given this is a subject I have been developing on recently…

In order for Big Data to work it requires abundant access to systems, data repositories, and the merging and tweaking of data beyond original data owner expectations or comprehension. The enterprise that balances the advantage of Big Data analytics with superior scaffolding will appreciate higher run rates and profitability without unfunded cost centers and above trend OpEx generally. The opportunity of Big Data without this business intelligence will be squandered and the benefits not realized as a direct result.

The CIO has this ownership and it is the purview of the Audit Committee to ensure that these risks are understood and tackled. The Board of Directors have proven to value equally the aggressiveness of Data Analytics with the ongoing revaluation of the risk tolerance and acceptance points of the business. As one can imagine, this is a familiar yet distinct activity within the executive structure, but three key attributes / activities that indicate a successful approach are as follows:

Vertical awareness – product awareness, strategy, and full line of sight for each major revenue center

Senior strategy alignment – what does the Board seek in this DA movement; What does the CEO/CIO envision on these product expansions; What is the audit committee observations (meaning that they must have visibility and mindfulness to the impact)

Good short presentation on value of pattern based strategies, by Gartner

$29B will be spent on big data throughout 2012 by IT departments. Of this figure (Forbes)

Or a classic business case example:

“The cornerstone of his [Sam Walton’s] company’s success ultimately lay in selling goods at the lowest possible price, something he was able to do by pushing aside the middlemen and directly haggling with manufacturers to bring costs down. The idea to “buy it low, stack it high, and sell it cheap” became a sustainable business model largely because Walton, at the behest of David Glass, his eventual successor, heavily invested in software that could track consumer behavior in real time from the bar codes read at Wal-Mart’s checkout counters.

“He shared the real-time data with suppliers to create partnerships that allowed Wal-Mart to exert significant pressure on manufacturers to improve their productivity and become ever more efficient. As Wal-Mart’s influence grew, so did its power to nearly dictate the price, volume, delivery, packaging, and quality of many of its suppliers’ products. The upshot: Walton flipped the supplier-retailer relationship upside down.” – Changing The Industry Balance of Power

A good (no paywall) article on Forbes here breaks down the IT spent related directly to Big Data and compares against prior years up to 2012 & by industry.

Also check out this MIT Sloan article co-developed with IBM entitled Big Data, Analytics and the path from Insight to Value – most interesting for me was page 23 relating to Analytics trumping intuition. This relates to EVERY business process, product, sales opportunity, accounting, fraud detection, compliance initiative, security analytics, defense and response capabilities, power management, etc … A worthwhile read for each executive.

“The 31-page proposal addresses how social media impacts compliance and legal risk, operational risk, reputational risk, and an increased risk of harm to consumers. While the agencies note that no additional regulations apply to social media, the relatively casual communication channels are not exempt from the rules, either.

According to the proposal, social media risk management programs should include a governance structure that includes how social media contributes to strategic goals, policies and procedures, third party due diligence, employee training, oversight, audit and compliance functions, and a reporting process.” – reference

Considering the velocity of the risks in this area and the lagging of legislation, it is fair to say that those even OUTSIDE the purview of the FFIEC, should strongly consider these as inputs to their compliance and security programs.

“The FFIEC invites comments on any aspect of the proposed guidance. It is specifically seeking comments on the following questions:

Are there other types of social media, or ways in which financial institutions are using social media, that are not included in the proposed guidance but that should be included?

Are there other consumer protection laws, regulations, policies or concerns that may be implicated by financial institutions’ use of social media that are not discussed in the proposed guidance but that should be discussed?

Are there any technological or other impediments to financial institutions’ compliance with applicable laws, regulations, and policies when using social media of which the Agencies should be aware?”

The security compliance program of an enterprise is a core function in the achievement of sales, maintaining regulatory and contractual obligations, meeting the security challenges in a connected world, and achieving a balance of consistent operations while returning a profit for the business. A challenge within these programs, and especially for businesses do that do not have a consolidated mature program operating at the executive level is the transparency of cost and improvement of margins within operations.

Transparency of cost relates to the costs of supporting compliance, security, and privacy requirements within products and services. The lack of transparency can exist in many areas, but this article focuses on the specific costs related to reporting to third parties on the state of the compliance and security program. Cost of such can exist in any of the following scenarios:

Sales person seeking to close a sale brings onboard an engineer and product manager to speak to / commit on security and regulation safeguards. Such initiation of new agreements may require a 250+ questionnaire to be completed by such an engineer that typically requires additional parties to respond – resulting in roughly 30-50 hours of engineer time x % of new deals signed annually)

The end result of this singular area of cost is time taken from valuable engineers away from developing product, improving product, and executives focused on tactical activities. In addition, a non-optimized security compliance program does not gain any leverage by the above activities, so each activity is repeating past work. Zero scale is achieved.

Reflecting on your organization, improvements can be gained. An attribute that has proven beneficial is to consider the following that easily measurable and can be tracked:

What is the unique number of security and compliance controls deployed within the products & services?

What is the number of queries for each period?

What is the number of FTE hours to address these queries? (the above are averages that I have seen, but analysis is worth refreshing for your organization)

What is the number of interactions the individuals have with the customers?

What is the current central approach to meeting the needs and responding to such queries?

The last question is leading to the idea that the program should be centralized in a manner to manage these questions centrally. This provides scale, lessons learned, and coordination across the business. The program itself when designed and tracked in such a manner becomes part of the sales process, account maintenance, and a regular touch point for the customer. Establishing the proper executive leadership and integrating this program is critical to every direct to consumer business, and more so for the rapidly growing technology services sector.